Doctors Without Orders

Molina Healthcare gives physicians freedom to match the treatment with the culture

Dr. J. Mario Molina doesn't merely embrace diversity. He leverages it. "Health care is a very local business," says the CEO of Molina Healthcare Inc. (#61), a managed-care company based in Long Beach, Calif. "You can't assume just because you've got it right in one location that 12 blocks away it's going to be the same."

That's especially true in the often ethnically heterogeneous inner cities that are Molina's market. Molina Healthcare has flourished by accommodating cultural differences among its chiefly African American, Hispanic, and Southeast Asian clients. In a clinic with many Cambodian patients, for example, staffers know that large red abrasions on a child's chest may indicate not abuse but rather a folk remedy known as coining, in which a coin or spoon is rubbed against the ribs to dispel a cough. Some Hispanic patients may blame their diabetes on susto, or "fear." And their physicians must translate dietary recommendations from American foodstuffs (bread, for instance) into that community's equivalent (tortillas).

To make communication easier, the company tries to hire staff who live in patients' neighborhoods and speak their languages. (The current workforce is 44% white, 29% Hispanic, 14% African American, 11% Asian, and 3% other races.) By decentralizing the organization and encouraging providers to shape their services around an intimate understanding of the communities, Molina has grown the single clinic that his father started in 1980 into a $328-million company. Molina Healthcare now does business at 22 sites in California and has subsidiaries in Utah, Washington, and Michigan.

A few things are standardized, however. All providers -- both clinics and the physicians with whom Molina has contracts -- are close to patients' homes or bus lines, in order to make things easier for those of the business's 350,000 members who can't afford cars. Patients may have limited reading skills, so the company develops its own literature about everything from prenatal care to prostate-cancer screening. It tests the material on focus groups before distribution.

But patients are only one of Molina's concerns. His customers also include state agencies -- such as the California Department of Health Services -- with which Molina Healthcare has contracts. Virtually all of the company's revenues come from Medicaid and other government-sponsored health-insurance programs, which simplifies accounting by drastically pruning the number of payers. Checks arrive once a month, their amounts determined by the number of members enrolled, regardless of the number of patients seen or the services provided. "The trick is to be large enough so that you spread the risk," says Molina. "You gamble that not everybody is going to get sick at the same time."

Molina says that although welfare reform and a strong economy have reduced the number of people eligible for Medicaid, he has seen a compensatory rise in the rates that states are willing to pay. He doesn't fret about the implications of a new federal administration or an economic downturn, either. "Other companies enter and exit the Medicaid market depending on how profitable it is for them and how much effort they have to expend," says the CEO. "It's just the opposite for Molina. We are in it for the long term. We find ways to make it work."

"One of the things my father used to say -- to paraphrase the Bible -- is 'The poor will always be with us," says Molina. "No matter what the government does, there's going to be a need for our services."

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